The Corporate Transparency Act (CTA) became effective on January 1, 2024, initiating a new reporting requirement that affects most existing and newly formed businesses. This new law is unlike any requirement previously mandated for businesses. Businesses are now required to provide information concerning their companies’ Beneficial Ownership Information (BOI) to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN). The information is provided in a report called a Beneficial Ownership Information Report.
Reporting Obligations
Those required to report include any person, company, or Trustee who exercises substantial control of or owns 25% of a covered business. Additionally, each company must name a “Reporting Person” to report the required information and to be responsible for updating information that changes in the future within a specified time period.
The company information to be reported includes:
- Full name of the entity, and trade names or doing business as names (DBA)
- Physical address of the business;
- Jurisdiction of company formation; and
- Taxpayer Identification Number or Employer Identification Number (EIN)
Each beneficial owner, company applicant, and Reporting Person must submit his or her:
- Full legal name;
- Date of Birth;
- Current Address; and
- Number on an active government-issued identification (e.g., state identification, driver’s license, or passport) and a copy of the government issued document.
Further, companies must disclose the foregoing personal information about the person(s) who registered the entity with the Secretary of State to do business, sometimes an attorney, accountant or business that specializes in company creation.
Dates for Compliance
- Companies that were in existence prior to December 31, 2023, will have the 2024 calendar year to file their Initial BOI Report.
- Companies that were created after December 31, 2023, will have 90 days during 2024 after the business creation date to file their Initial BOI Report.
- After January 1, 2025, newly created businesses will have 30 days to file their report.
Fraudulent Correspondence Warning
Scammers are already taking advantage of the CTA reporting requirements. FinCEN has issued a warning that the agency has been advised of attempts to solicit information from individuals and entities who are subject to the CTA’s reporting requirements. Fraudulent correspondence may be sent by email or postal mail and may be titled “Important Compliance Notice.” The correspondence asks the recipient to click on a URL or to scan a QR code to provide their personal information. Do not click on the URL or scan the QR code and become a victim of this scam. FinCEN does not send unsolicited requests, and will not contact you for this information. It is the company’s responsibility to provide the information to FinCEN.
Penalties for
Non-Compliance
Noncompliance with the CTA reporting requirements may result in civil penalties of $500 per day for non-compliance with a maximum fine of $10,000 and criminal penalties up to 2 years in prison.
How Can We Assist You?
We suspect that businesses may have questions about the new requirements and the reporting system. The information that is to be disclosed should be easy to gather and report, but the CTA’s definition of “beneficial owner” is broad, and determining who must report may require analysis. To assist our clients, we have created a process for gathering and submitting the Initial BOI Report, designating a Reporting Person, and requesting a finCEN number for easier future reporting. If you have questions, or need assistance in meeting your reporting requirements, please contact our office. We are here to help you.